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Certainly hedge fund liquidation was seen today. As Dennis Gartman advised, "Better to panic and remain liquid." And Dennis should know because he is being whipsawed recently in his metals trades, judging by his acknowledged trades and advice at any rate. I am sure his investors feel safer in cash as well.
Could it be more than that? There has certainly been a keen desire in some quarters to keep silver below $36 and gold below $1430 the past few weeks.
"You never want a serious crisis to go to waste," Rahm Emanuel, Mr. Obama's new chief of staff. "Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before." WSJ, 21 Nov 2008
Does Crisis = Opportunity? Only for the nimble and those highly experienced in risk management. The average person would probably be better off waiting for the current situation to clarify.
Today's market commentary was intraday here.
I did come in and buy some of the throwaways in the first hour of trade, but I do not think we are out of difficulty yet. There will have to be a clearer signal from the Japanese government and Tokyo Electric that they have a credible and systematic solution for their nuclear power plant situation.
And then with all the liquidity being added by the central banks, I think there will be a rather sharp short covering rally. And we might even see a return to a bull market trend until the market reaches a more natural point of correction and the dollar crisis or some other more bubble specific problem occurs.
But if this situation in Japan worsens then all bets are off. And the trading is made a little more problematic because it is difficult to trust what people are saying on both sides.
Detective Gregory: "Is there any other point to which you would wish to draw my attention?"
Sherlock Holmes: "To the curious incident of the dog in the night-time."
Detective Gregory: "The dog did nothing in the night-time."
Holmes: "That was the curious incident."
A. Conan Doyle, Silver Blaze
The US dollar is rolling over and going lower today, no doubt easily explained away by the meme of Japanese selling their dollar Treasuries to raise cash to pay for their much needed repairs.
Except, that it does not bark sufficiently for me, but in context, the dollar just continues to roll over during what would ordinarily be a classic flight to safety rally scenario, even two years ago.
It is some consolation that the dollar is rolling over, perhaps, because it at least spares us another claim of inevitable victory over all things real from the Deflation's Witnesses. The decline in silver and to a lesser extent gold would have been more impressive except that they have been subject to vicious bear raids almost every day since they went into their delivery period on the Comex.
I can explain the selling and the general declines in almost everything easily enough through hedge fund liquidation. No one wants to meet margin calls under duress should the worst happen. As hedge fund advisor Dennis Gartman said, "Better to panic and remain liquid." I suspect this morning I might have been buying on the cheap from among of the things that Dennis' acolytes were throwing away. I think the metals are going higher if this support level holds. But as always, I make haste slowly.
There is a bit of a flow into Treasuries right after the aptly named Mr. Gross allegedly dumped them, but no net gains for the dollar. Where is all this cash going, and more interestingly perhaps, where is it going next?
And of course it is an options expiration week, and the markets are amazingly subdued given their declines and the dire news this morning on the airwaves. What is skulking in the corners and shadows of the financial sector, waiting for yet another attempt to baffle the world, if but for its sheer banality and obtuseness?
The Fed just had their FOMC announcement, with no change in policy, and absolutely no mention of Japan and any potential actions, reassurances, or impacts. They do see a continuing gradual improvement in the US economy, and a 'firmer footing.'
Of course these are the same Fed folks, the banking regulator as Consumer Advisory Council, that just examined the US mortgage market and said they found NOT ONE instance of a wrongful foreclosure. No surprise there really, since these jokers apparently could not find their own bubble-emitting posteriors with both hands, at least publicly and despite their newly released private meeting conversations. Robert Shiller said today that the housing bubble was the largest asset bubble in US economic history, since at least 1895 which is as far back as his records could go.
"We have now sunk to a depth at which re-statement of the obvious is the first duty of intelligent men." George Orwell
Do these people expect anyone to take them seriously? Little wonder that the Fed and their viceroys are caught in a credibility trap, which seems to be de rigueur in the commonwealth of global oligarchs and autocrats these days.
Many dictators are foul, corrupt sociopaths, violent people who use violence and murder as a matter of course in the self-serving and often obsessive acquistion of wealth and power.
But in the so called civilized western world we have something almost worse: well educated men, leading comfortable, professional lives, committing gut wrenching economic atrocities for the mere sake of appearances, and a clubby kind of quid pro quo.
"Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." T.S. Eliot, 1950
Curiouser and curiouser.
